Wall Street on the sidelines in gold market as blockbuster NFP raises calls for Fed to hike 75 basis points in September
In the latest gold survey, some market analysts said Friday's blockbuster employment report had taken the wind out of gold's sails, at least for the short term.
Ahead of the latest survey results, the U.S. Bureau of Labor Statistics said 528,000 jobs were created in July. The data significantly beat expectations economists were forecasting job gains of around 250,000. The report also noted a solid increase in wages.
While some analysts continue to see more upside potential, many have taken more neutral and bearish stances. Retail investors remain solidly bullish on gold.
"The gold market has given us a taste of what the Fed pivot will look like, but the real pivot isn't here yet," said Adam Button, chief currency strategist at Forexlive.com. He is looking for lower prices in the near term. "Next week's CPI is a big risk for gold and just about everything else."
This week, 16 Wall Street analysts participated in the Kitco News gold survey. Among the participants, four analysts, or 24%, were bullish on gold in the near term. At the same time, seven analysts, or 41%, were bearish on gold. Six analysts, or 35%, cast neutral votes this week.
Meanwhile, 579 votes were cast in online Main Street polls. Of these, 379 respondents, or 65%, looked for gold to rise next week. Another 124, or 21%, said lower, while 76 voters, or 13%, were neutral in the near term.
Wall Street's shift in sentiment comes as gold prices look to end the week in roughly neutral territory, falling from a three-week high. December gold futures last traded at $1,789.10 an ounce, up less than 0.5% from last Friday.
Analysts have said that the July employment report has single-handedly shifted sentiment in the marketplace as investors now expect the Federal Reserve to maintain its aggressive monetary policy stance in September.
"U.S. jobs data means the Fed is more likely to hike another 75 [basis points] next month. Gold's shine is dimmer. A break of $1750 could see $1725, but there is a reasonable chance it sees $1700," said Marc Chandler, managing director at Bannockburn Global Forex.
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The CME FedWatch Tool shows that markets now see a more than 70% chance of a 75-basis point move next month. Ahead of the employment report, markets were pricing in a 34% chance of an aggressive move.
Adrian Day, president of Adrian Day Asset Management, said he is neutral on gold for next week as the latest employment data will make gold investors a lot more cautious. However, he added that long term, he remains bullish.
Frank McGee, precious metals dealer at Alliance Financial, said that he is bearish on gold in the near term as the precious metal "can't fight the Fed."
However, some analysts remain bullish on the precious metal, noting that prices are still holding support. Jim Wyckoff said the market still has some technical bullish momentum that could drive prices higher next week.